SHORT NOTE ON FINANCIALS

When you have a second, go check out yields as they move off their lows today. Yields had been drifting lower. Maybe a short term turn has been made as yields start to head higher. So what happens? FINANCIALS get going again. There remains a direct correlation between big and medium financials and yields. The thought process is if yields on the long end head higher, margins expand. Margins expand…profits expand. Profits expand…the underlying stocks go up. The connection remains. How far/ Don’t know! How long? Don’t know. Best looking? C, BK, CMA. Most are much lower in their bases but most have held the support going back many months. Stay tuned!

PRE MARKET AND HEALTHCARE

S&P futures almost flat but NASDAQ/NDX futures down decently because:

GOOGL down $12 as European anti-trust wants to fine them 2.4 billion euros for skewing searches in their favor…and just overall sloppy action yesterday in tech/internet. To be watched…ESPECIALLY THE SEMIS.

OIL prices strong this morning. Energy remains in a bear market but a word to the wise: EVERYONE NOW BEARISH. EVERYONE NOW DOWNGRADING. EVERYONE CALLING IT A BEAR MARKET…AFTER THE DROP.  As of this second, any bounce is just that, an oversold bounce.

On healthcare…we are always amazed how politics picks and chooses. The big deal now is that the CBO says over 20 million will lose healthcare insurance under the Senate bill while lowering the deficit by a decent amount. We dont understand! Why would anyone look to the CBO on healthcare when they said Obamacare would sign up 23 million but only signed up 11 million. That’s only off by over 50% yet we are supposed to pay attention to their opinion? We have read through this. We have read all opinions. We have news for you…no one knows the outcome if it is passed but we do know one thing. IF THE TRAJECTORY DOES NOT CHANGE, IT WONT MATTER ANYHOW.

Medicaid was enacted in the mid 60s to help the indigent get medical care. It was supposed to help out the states. Over time, it was expanded to help seniors who have no assets and for long-term care for people with disabilities. Once Washington took over, guess what happened? Costs skyrocketed. Budget? What’s a budget? Any bill sent in? Paid! Through the years, expanded and expanded and expanded which led to Obama who relaxed eligibility rules in a major way. Medicaid rolls went up over 10 million people to the mid- 70 millions. Repeat, over 70 million people on Medicaid. Taxes were hiked on all. Costs soared. Guess what happened next? You got it! More and more refused to accept Medicaid patients. Need we go on.

Another government program which started out as a helping hand to a certain few turns into a monstrous, and we mean monstrous blob spending over $570 billion last year…that’s $570 billion. Go read about the EPA and how it started and where it is now! Again, we have no idea how it ends. What we do know is that we are $20 trillion in debt, deficits forever, government spending rising infinitum and anyone who wants to roll some of the nonsense back…is heartless, racist, and all that crap. Good luck!

THE CLOSE

We never like strong opens and weak closes.

Watching the SEMIS and the big TECH/INTERNET and all that stuff. We are less than thrilled with the pattern on the SOX as it drops and wedges up. And now the potential for the same in a lot of tech names . Also, the biggies are now starting to trade wide and loose, more jagged and now the patterns take on the potential for a double top. More cards will need to come out of the deck. 50 day/10 week moving averages are to be watched for all.

Otherwise, DOW was still up but was up triple digits early.

 

EARLY HMMM! NOTES

The mystery gap to the upside has already faded into the red for the NASDAQ-types/SEMIS. Our big worry of half the SEMIS in bad shape has to be watched as the SOX has rallied up but…

Seeing a few ugly wedges in other SEMI names.

Watching real closely here as the 50 day held on the nasty drop but this bounce becoming somewhat icky! Yes…icky! It is early in the day.

PRE MARKET

We try to be very careful with our words here. There are too many calling for 5,000 DOW and just as many calling for 50,000 DOW. You know what we mean and you must know, they are usually selling something.

We have never called for crashes. We have never called for melt-ups. We do call for the major trends both up and down…and when changes occur, we let you know. On June 9th, the NASDAQ/NDX-types had one of those days. We questioned whether it could possibly be the changing of the guard. For sure, a few things are rolling over and others have emerged. (BIOTECH) We went on to tell you that as long as the 50 day/10 week average holds up, all is well. It looks like by the day, that all important area of support is holding…and with this morning’s gap (even though durable goods yonked), it gets stronger. We add the SOX to this equation as it continues to also hold though there are many names in the group that are now acting suspect.

So…as of this second, June 9th looks like nothing more than a sharp drop off of extended conditions. Since, the great have rallied into new highs, the good have rallied into or near new highs, the ok have rallied back some of the drop…and of course, the BIOTECHS broke out of a long range.

It is end of month but more importantly, end of quarter window dressing this week…and into what is usually an upward biased pre-holiday trading. Of course, window dressing is illegal so it does not happen. A few of the big tech/internet names are now teasing old highs (helping the QQQ). And we now think the onus is on the bears to prove themselves. Again, there are still plenty of areas in bad shape but the good is getting gooder again.

This morning, for the second week in a row, a good Monday gap to the upside on no news.

WEEKEND NOTES

BIOTECHS blasted out of the big base set-up we told you was occurring. It is now very extended but thinking this is for real. Pullbacks should be looked at.

REGIONAL BANKS look the opposite as many are rolling over. Watch the KRE. A break below $51 would be a big negative.

The SEMIS still holding as they dropped down to support and have held so far. This is very important as they are a market leader, both up and down.

Leading growth big tech/internet and all that stuff has held the 50 day/10 week moving average. A few amazingly look poised for new highs. Again, something to watch very closely.

We are now watching SOLAR stocks. Yes…dead and buried names coming back to life off of long bases…some off the lows.

We are still counting about 40% of stocks in poor shape. This is amazing considering most major indices are near highs. It just tells you how split the tape is and is something to pay a lot of attention to.

With major indices at new highs, we would continue to avoid a big list of sectors including energy/oil & gas, big retail, drug stores, supermarkets, discount retail, auto parts retail, autos, most commodity areas including steel, gold, silver and other stuff, big telecom, russia, brazil and now seeing some trouble in home improvement retail , machinery and chemicals.

Areas that remain in fine shape are hotels, cruise lines, insurance, tobacco, gaming, managed care, biotech, medical products, healthcare anything and housing.

MORE POLITICAL BULL ON HEALTHCARE AND SPENDING!

Who said this?

“The Republican health care plan: “Don’t get sick. The Republicans have a back up plan in case you do get sick. This is what the Republicans want you to do. If you get sick America, the Republican health care plan is this: Die quickly!”

This was not said in the past week but by ex Congressman Alan Grayson just a few years ago.

Who said this?

What the Republicans have said is rather than touch one hair on the heads of the wealthiest people in our country, people who make over $1 million a year, they’re saying, “Seniors should pay $6,000 more dollars a year. But please don’t let us ask the wealthiest to do their fair share!”

It was not said in the past week but in the late 2000s by none other than Nancy Pelosi.

Who said this?

” Republican Washington is not interested in a hand up to Americans struggling in tough times. It is more interested in hand outs to millionaires and the corporate special interests!”

It was not said in the past week but by House Majority leader Dick Gephardt in the mid 90s.

Who said this?

“The Republican program is the profit-protection program for the insurance industry. It’s a bill of goods. It’s a bill of wrongs.”

It was not said this past week. It was said by Senator Ted Kennedy in the mid 90s.

We could have spent pages and pages of quotes on Democrats demonizing Republicans on taxes, healthcare and the like. The problem with all this demonizing is the facts, is the numbers. So, in spite of the Republican party being heartless, selfish, hateful of the poor, hateful of the old, hateful of children, hateful of the downtrodden, only caring about the rich…here are the facts.

FEDERAL SPENDING THROUGH ALL THESE YEARS HAS SKYROCKETED.  FEDERAL SPENDING WILL BE $4.1 TRILLION THIS YEAR, $5.1 TRILLION IN 2021. THIS IS UP FROM $1.7 TRILLION IN THE YEAR 2000. HEARTLESS?

WELFARE SPENDING HAS SKYROCKETED TO THE POINT WE HAVE OVER 80 WELFARE PROGRAMS DOLING OUT OVER $1 TRILLION EACH YEAR. HEARTLESS?

MEDICAID SPENDING HAS SKYROCKETED. PEOPLE ON MEDICAID HAS SKYROCKETED AS A CERTAIN PRESIDENT LOOSENED ELIGIBILITY. HEARTLESS?

DEBT HAS SKYROCKETED. $20 TRILLION! REPEAT! $20 TRILLION. HEARTLESS?

The question is just how much bull—t do you want to hear from one party who keeps losing elections and who keeps telling you the other side is heartless while the numbers continue to skyrocket. The fact is we warned you. We warned you that anyone who even tries to slow down spending on anything will be declared heartless souls by the same people who were part of exploding all these numbers…saddling the unwary taxpayer with debt that can never possibly be paid back.

The fact is Obama raised taxes ON EVERY AMERICAN. You do remember he said he would not. EVERY AMERICAN’S taxes went up under Obamacare yet rolling back those tax hikes are nothing more than tax cuts for the rich. The fact is Obamacare  is failing in every way, shape and form as you cannot fit a 10 pound salami in a 5 pound bag. It was never going to work long term and they knew it. The fact is Obama and the Democrats lied on purpose to the American public but somehow they get cover from a complicit media. GRUBER ANYONE? Has anyone reported in the past few days about this lying miscreant? The fact is no one really knows the outcome of this Senate bill or any subsequent bill except we can promise one thing…spending on healthcare, on medicaid, on medicare is going to continue to go up and up and up. The lies through the years have been proven wrong. The facts and the numbers say so.  These people have been demonizing since the year of my Bar Mitzvah, using the same lines, the same terms and the same garbage yet they still say the same thing over and over again and the media still gives them cover…AND THE GOVERNMENT SPENDING NUMBERS CONTINUE TO SKYROCKET!

PRE MARKET

Thoughts on the senate healthcare bill:

Subsidies, grants, tax credits, waivers. All are in the senate bill. All four mean the taxpayer continues to be on the hook for others. This should never be. But in the world of socialist governments, the taxpayer is always on the hook.

Unfortunately, while the bill is a definite improvement on Obamacare, it continues to be a twisted jigsaw puzzle with a bunch of pieces missing. Expiration dates, add-ons, take-offs, do this and you get that. Don’t do this and you don’t get that. Where is the market forces in all this? Why can’t we get to the point where health insurance is an ice cream store. You walk in. You pick your flavor and you pay for it. Why? Because government wants to continue to tell you what you have to have.

The good news in this bill is it takes away the taxes Obama foisted upon the public. Of course, the socialists will now tell you it is a tax cut for the rich. They never change. The good news is that the mandates are gone but there is still a lot more to be desired. I guess you can’t have it all when you have such a blob of a system.  Just do not believe anyone telling you the outcome of this. THEY DON’T KNOW! The fact is the system, which basically government has taken over, is screwed. Time will tell.

We do know one thing. One of the architects of Obamacare said in order to fix Obamacare…just PENALIZE people more in order to FORCE them into buying something they don’t want. Now that is economics for you.

Futures flattish. Mixed bag yesterday. Again, BIOTECHS with the big breakout of range…and that has not stopped as the big money flows to it. That is helping in that the SEMIS look like the opposite right now. SEMIS are still above the 50 day but distribution in many names. To be watched.